People going to tertiary markets instead of primary and secondary cities

People going to tertiary markets instead of primary and secondary cities

BY ANDREA ZANDER

Employees lead the shift from primary and secondary cities to more affordable and livable areas with the rise of hybrid work environment, according to Graceada Partners in its The Emergent Value of Third City Markets report, which ranks tertiary markets that represent strong potential for real estate investment.

Third City Markets (TCMs) are defined as a tertiary market with between 100,000 to 200,000 residents within several hours drive or a short plane ride from a major hub. To find these undervalued TCMs, Graceada Partners analyzed U.S. Census data, AARP livability statistics, and metrics through CoStar to refine their list. The top 20 TCM cities were chosen and ranked based on aggregating these benchmarks.

“Through flexible work agreements from hybrid to remote, businesses have continued to expand into secondary and tertiary markets — which includes hiring workers specifically in secondary and tertiary markets,” said Joe Muratore, co-CEO, Graceada Partners. “TCMs—such as Cheyenne, Rapid City, and Redding which we ranked as the top three tertiary markets—are proving to be a place for both investors and residents as the next frontier of value.

The full list includes:

  1. Cheyenne, Wyoming

  2. Rapid City, South Dakota

  3. Redding, California

  4. Columbia, Missouri

  5. Lake Havasu, Arizona

  6. Idaho Falls, Idaho

  7. La Crosse, Wisconsin

  8. Pueblo, Colorado

  9. Bakersfield, California

  10. Yakima, Washington

  11. Yuma, Arizona

  12. Bloomington, Illinois

  13. Las Cruces, New Mexico

  14. Bloomington, Indiana

  15. Norman, Oklahoma

  16. McMinnville, Oregon

  17. Topeka, Kansas

  18. El Centro, California

  19. Yuba City, California

  20. Kalamazoo, Michigan

This report also shows the five trends that are driving people away from primary and secondary markets. Graceada Partners has already shown the trend of workers and businesses moving towards a new economic paradigm shift in their Rise of the Outpost Economy report.

Lack of multifamily affordability in secondary markets and industrial growth within TCMs are two of the trends highlighted by the report. These trends highlight some of the opportunities in undervalued Third City Markets.

“More and more, growing tertiary markets are catching the interest of investors as a way to strategically diversify their investments,” said Ryan Swehla, co-CEO of Graceada Partners. “Major markets have increasing housing and development costs with little room to keep expanding, which makes these areas largely unattainable for many workers with lower incomes.”

Additionally, the report notes increased industrial development interest in TCMs with the Amazon warehouse halo effect. As secondary markets become increasingly institutionalized, TCMs – especially those ranked in the report – represent the next frontier of opportunity.

To read the full report, click here.

Devin Beggs